ENERGY >Turkey’s Zorlu ‘in talks on Israeli gas’

Turkey’s Zorlu Energy is in talks with Israeli firms over the potential for a pipeline to carry Israeli gas to Turkey, industry sources say, but the political rift between the two former allies is holding up progress.

Israel is set to become a gas exporter by the end of the decade after the discovery of two major offshore fields off its Mediterranean coast - Leviathan and Tamar.

Turkey, dependent on imports for almost all of its energy, is looking to diversify away from expensive Russian gas and could become a customer as well as providing a transit route to other markets, particularly Europe.

“Turkey is a very suitable route for Israeli gas. I can even say it is the most suitable,” said Ömer Yüngül, chief executive of Zorlu Holding, the owner of Zorlu Enerji.

But relations between the two countries have been scarred since May 2010 when Israeli commandos killed nine Turkish activists while storming the Mavi Marmara, a ship in a convoy seeking to break an Israeli naval blockade of Gaza.

Industry and diplomatic sources said the Zorlu Group, which already holds an indirect stake in an Israeli power plant, is in talks with private Israeli companies over a possible pipeline deal. Yüngül did not confirm the talks, but said Zorlu Energy’s existing investments in Israel have given it a head start. Zorlu Energy holds a 25 percent stake in Dorad Energy, which is building an 875 megawatt (MW) gas-fired power plant in Ashkelon on the Israeli coast. Yüngül said the first unit of the plant would come on line by February 2014.

Other Turkish companies including Turcas Petrol are also interested in a pipeline project, officials on both sides have said.

Such a project could be worth $3.5 billion, according to Amit Mor, an Israel-based consultant.